1. INTRODUCTION
Article 531 of the Turkish Commercial
Code Nr. 6102 (“TCC”) grants minority shareholders of incorporated companies
the right to seek the dissolution of the company where just grounds exist. This
provision is intended to protect minority shareholders in situations where the
majority abuses its managerial power, the minority is systematically excluded
from the company’s affairs, or the corporate relationship has otherwise become
intolerable.
In practice, however, actions for
dissolution on just grounds are frequently accompanied by requests for interim
legal protection through which the claimant shareholders seek judicial
intervention in the management of the incorporated company. In this context,
claimants commonly request the appointment of a trustee to the incorporated
company, the appointment of a supervisory trustee to oversee the company’s
management, or the issuance of interim injunctions aimed at preventing the
transfer or disposal of the company’s assets.
This article first examines the legal
nature of actions for the dissolution of incorporated companies on just
grounds, as well as the limits of judicial intervention in such actions. It
then evaluates applications for the appointment of a trustee in actions for
dissolution on just grounds in light of the relevant provisions of the Turkish
Civil Code, the prevailing views in legal doctrine, and judicial decisions.
Finally, it analyzes applications for interim injunctions concerning the
company’s assets within the framework of the provisions of the Code of Civil
Procedure governing interim legal protection.
2. THE LEGAL NATURE OF ACTIONS FOR
DISSOLUTION ON JUST GROUNDS AND THE LIMITS OF JUDICIAL INTERVENTION
Article 531 of the TCC grants
minority shareholders representing a specified proportion of the share capital
in an incorporated company the right to seek the dissolution of the company
where just grounds exist. Accordingly, shareholders representing at least
one-tenth of the company’s share capital, or one-twentieth in the case of
publicly held companies, may apply to the commercial court of first instance
having jurisdiction over the place where the company’s registered office is situated
and request the dissolution of the company on just grounds.
However, the purpose of Article 531
of the TCC is not to bring about the dissolution of the incorporated company in
every dispute. Indeed, the provision confers broad discretion upon the court to
order, instead of dissolution, the purchase of the claimant shareholders’
shares at their fair value as of the date closest to the date of the judgment
and their consequent exit from the company, or to adopt another appropriate and
acceptable solution suited to the circumstances of the case.
It is likewise well established in
legal doctrine that an action for dissolution on just grounds is an exceptional
remedy and that the dissolution of the incorporated company should be regarded
as a measure of last resort (ultima ratio). Accordingly, the court
should first determine whether less intrusive measures or alternative remedies
capable of resolving the dispute are available. Only where no reasonable
solution capable of preserving the continued existence of the company can be
identified should dissolution be ordered as a remedy of last resort.
The exceptional nature of actions for
dissolution on just grounds is also significant in determining the limits of
the court’s authority to intervene in the management of the incorporated
company. This is because, in incorporated companies, the board of directors and
the general assembly are mandatory corporate organs prescribed by law, and
their duties and powers derive directly from statutory provisions. Matters such
as the conduct of company management, the appointment or removal of members of
the board of directors, the determination of company policies, and the
distribution of profits generally fall within the sphere of authority of the
company’s internal organs.
Therefore, the mere filing of an
action for dissolution on just grounds does not confer upon the court the
authority to replace the company’s management or direct the company’s
activities. The court’s function is limited to assessing the existence of the
alleged just grounds and ordering the measures prescribed by law for the
resolution of the dispute. An approach to the contrary would undermine the
system of corporate organs underlying the structure of incorporated companies.
Within this framework, applications
for the appointment of a trustee, which are frequently encountered in practice,
must also be assessed by taking into account the limits of judicial
intervention in incorporated companies and only where the exceptional conditions
prescribed by law are satisfied.
3. ASSESSMENT OF APPLICATIONS FOR THE
APPOINTMENT OF A TRUSTEE IN ACTIONS FOR DISSOLUTION ON JUST GROUNDS
One of the applications frequently
encountered in actions for dissolution on just grounds is the appointment of a
trustee to the defendant incorporated company as an interim measure.
Particularly in actions brought by minority shareholders, claimants request the
court to appoint either a trustee with powers of management and representation
or a supervisory trustee on the grounds that the company is being mismanaged,
that the company’s assets have been impaired, or that the term of office of the
board of directors has expired.
It should be noted here that the
Turkish Commercial Code does not contain any specific provision concerning the
appointment of a trustee to incorporated companies. Therefore, in assessing
applications for the appointment of a trustee to incorporated companies, the
provisions of the Turkish Civil Code concerning trusteeship must be taken into
consideration.
Article 403(2) of the Turkish Civil
Code provides that a trustee shall be appointed for the purpose of carrying out
specific tasks or managing assets. Article 426 of the Turkish Civil Code stipulates
that the guardianship authority shall appoint a representative trustee, upon
the request of the relevant person or ex officio, in the circumstances
specified in that provision or in other cases provided for by law, and that the
appointment of a trustee does not prevent the legal representative from
performing her/his duties. Article 427 of the Turkish Civil Code, on the other
hand, sets out that a trustee shall be appointed where a legal entity is
deprived of its necessary organs and its management cannot be ensured through
any other means.
In particular, pursuant to Article
427(4) of the Turkish Civil Code, it is accepted that a trustee may be
appointed where a legal entity is deprived of its necessary organs and its
management cannot be ensured through any other means.
Within this framework, the
appointment of a trustee to an incorporated company requires, first and
foremost, that the company has become deprived of its mandatory organs or that
its existing organs have become legally or factually incapable of functioning.
In other words, the appointment of a trustee may arise where the management of
the company cannot be maintained through ordinary mechanisms, and the resulting
management vacuum cannot be remedied by any other means.
With respect to this matter, under its
decision, dated 08/03/2018 and bearing the Basis number 2016/7714 and the
Decision number 2018/1804, the 11th Civil Chamber of the Court of
Cassation held that: “For the appointment of a management trustee, it is
required that the establishment of the company’s board of directors is not
possible in any manner and that this deficiency has not been remedied through
other legal means. Where the company has an elected board of directors, it
cannot be argued that there is an absence of a corporate organ; likewise, the
inability of the existing board of directors to function is a situation that
can always be remedied within the framework of the Turkish Commercial Code’s system.”
The TCC does not grant the court the
authority to remove members of the board of directors of an incorporated
company (regardless of the underlying reason) and appoint replacements in their
stead; this authority belongs to the general assembly. Therefore, a decision by
the court to appoint a management trustee, which would result in the removal of
the board members’ powers of management and representation, may only be
rendered in circumstances where such powers cannot be exercised either legally
or factually.
However, allegations that the company
is being poorly managed, that the board of directors has adopted erroneous
decisions, or that minority shareholders do not agree with the company’s
policies do not, in themselves, justify the appointment of a trustee.
Likewise, under its decision, dated
11/09/2025 and bearing the Basis number 2025/996 and the Decision number 2025/895,
the 21st Civil Chamber of the Regional Court of Appeal of Ankara held
that: “Accordingly, a judge cannot appoint a management trustee on the
grounds that the company is not being properly managed; in other words, the
judge cannot conduct an ‘appropriateness’ review of the company’s management.
The purpose of Article 427(4) of the Civil Code is not to ensure that the
company achieves better management; rather, this is an internal matter of the
company. The authority to monitor and evaluate the management of the company
exclusively belongs to the general assembly. The general assembly, which
disapproves of and considers the management inappropriate, may remove the
members of the board of directors from office, refrain from re-electing them,
refuse to discharge them, and resolve to initiate liability proceedings against
them.”
Indeed, allegations that members of
the board of directors have managed the company negligently or even abused
their duties and powers cannot be resolved through the appointment of a
trustee. Shareholders may bring such allegations before the general assembly
and seek solutions to the relevant issues through corporate mechanisms. In this
regard, shareholders may exercise the rights granted under the TCC, including
the right to obtain information and inspect documents under Article 437,
request the appointment of a special auditor under Article 438, initiate
liability actions against members of the board of directors under Articles 553
et seq., bring actions for the annulment or nullity of resolutions of the
general assembly and the board of directors pursuant to Articles 445 and 447,
and, as minority shareholders, file an action for the dissolution of the
company on just grounds under Article 531. In short, shareholders must seek
remedies for allegations of violations in these matters and claims that the
minority is being oppressed by the majority through the individual or minority
shareholder rights provided under the TCC. It is therefore not possible to
bypass these legal remedies and request the appointment of a management trustee
by the court on the basis of such grounds. [1]
In conclusion, the appointment of a
trustee to an incorporated company is not a mechanism that may be resorted to
for the purpose of addressing dissatisfaction with the company’s management,
disapproval of the board of directors’ decisions, or disputes between minority
shareholders and the majority. The appointment of a trustee is only possible
where exceptional conditions exist, such as the company being deprived of its
mandatory organs and the management of the company being incapable of being
ensured through other means.
4. ASSESSMENT OF APPLICATIONS FOR
INTERIM INJUNCTIONS IN ACTIONS FOR DISSOLUTION ON JUST GROUNDS
Another application frequently
submitted by claimant shareholders in actions for dissolution on just grounds
is the imposition of an interim injunction over the assets of the incorporated
company. In practice, applications are particularly made for the issuance of
interim injunctions aimed at preventing the transfer of the company’s immovable
properties, vehicles, shareholdings in subsidiaries or affiliates, or other
assets to any third parties.
It should first be noted that the
institution of interim injunction is set out under Articles 389 et seq. of the
Code of Civil Procedure Nr. 6100 (“CCP”) and constitutes one of the forms of
interim legal protection that may be sought where there is a concern that
obtaining the right may become significantly difficult or entirely impossible
due to a change that may occur in the existing circumstances, or that serious
harm may arise as a result of delay.
Pursuant to Article 389 of the CCP,
the existence of a right worthy of protection on the part of the applicant is
not, by itself, sufficient for the granting of an interim injunction; there
must also be a concrete risk requiring the immediate protection of such right.
In addition, pursuant to Article 390(3) of the CCP, the party requesting an
interim injunction is required to demonstrate, on the basis of a prima facie
standard of proof, the existence of the right relied upon and the grounds
justifying the requested measure.
Likewise, under its decision, dated 02.11.2023
and bearing the Basis number 2023/1950 and the Decision number 2023/1788, the
14th Civil Chamber of the Regional Court of Appeal of Istanbul held
that: “Although it has been abstractly alleged that fictitious and collusive
transactions may be carried out over the company’s assets, thereby causing harm
to the company’s shareholders and creditors, no evidence has been submitted in
this regard. Although the reasoning for rejecting the injunction concerning the
immovable property, on the ground that the company’s assets became the subject
matter of the dispute due to the action for dissolution, is not appropriate,
the rejection of the application for an interim injunction is correct in
terms of its outcome, since no evidence meeting the prima facie standard of
proof has been submitted indicating that a member of the board of directors has
carried out any transaction reducing the company’s assets, caused harm to the
company, or attempted to dispose of the immovable property in a manner contrary
to the company’s interests.”
Pursuant to established judicial
precedents, abstract concerns raised by claimant shareholders that the
company’s assets may in the future be dissipated, become subject to collusive
transactions, or that the company’s managers may cause harm to the company are
not, by themselves, sufficient to justify the granting of an interim
injunction.
In conclusion, the mere filing of an
action for dissolution on just grounds does not, by itself, require the
granting of an interim injunction. The claimant shareholders must present
concrete facts demonstrating that the company’s assets may be diminished or
that the right likely to be obtained at the end of the proceedings may be
seriously jeopardized, and they must support such facts by satisfying the prima
facie standard of proof. An approach to the contrary would exceed the purpose
of the interim injunction mechanism, potentially resulting in the unnecessary
restriction of the company’s activities and disproportionate interference with
the corporate functioning of incorporated companies.
5. CONCLUSION
An action for the dissolution of an
incorporated company on just grounds constitutes an important legal mechanism
aimed at protecting minority shareholders; however, due to its potential
consequences, which may extend to the termination of the company, it is an
exceptional type of action. Therefore, pursuant to both Article 531 of the TCC
and the prevailing view in legal doctrine, the dissolution of the company
should be regarded as a remedy of last resort, and alternative solutions
capable of ensuring the continued existence of the company should be considered
as a priority.
The same approach applies to
applications for the appointment of a trustee, which are frequently submitted
in actions for dissolution on just grounds. The TCC does not contain any
specific provision concerning the appointment of a trustee to incorporated
companies; therefore, such applications must be assessed within the framework
of the provisions of the Turkish Civil Code concerning trusteeship.
Accordingly, the appointment of a trustee may only be possible where
exceptional conditions exist, such as the company being deprived of its
mandatory organs and its management being incapable of being ensured through
other means. Allegations that the company is poorly managed, that the decisions
of the board of directors are inappropriate, or that minority shareholders do
not agree with the company’s management policies do not, by themselves, justify
the appointment of a trustee.
Similarly, applications for the
imposition of interim injunctions over the company’s assets must be assessed
within the framework of the conditions set forth under Articles 389 et seq. of
the CCP. For an interim injunction to be granted, it is not sufficient for the
claimant merely to assert the existence of a right; there must also be concrete
facts demonstrating that the exercise or realization of such right may be
seriously jeopardized, and these facts must be established according to the
prima facie standard of proof. Abstract allegations that the company’s assets
may be dissipated in the future or that the company’s managers may cause harm
to the company should not be deemed sufficient for the granting of an interim
injunction.
Ultimately, applications for the
appointment of a trustee and interim injunctions submitted in actions for
dissolution on just grounds constitute forms of interim legal protection that
may result in direct intervention in the management of the company. Therefore,
when assessing such applications, courts should take into consideration the
system of corporate organs of incorporated companies, the freedom of corporate
activity, the principle of majority rule, and the principle of proportionality.
Interim legal protection mechanisms should not be allowed to become instruments
of pressure or intervention in the resolution of internal corporate disputes.
Att. Ezgi Karpınar
References:
1. Prof. Dr. Ersin
Çamoğlu, Anonim Ortaklığa Yönetim Kayyımı Atanması (Appointment of a
Management Trustee to an Incorporated Company),
Journal of Istanbul Bar Association, Vol. 91, Issue: 5, Year: 2017, pp. 17, 24 &
25.
